Tag Archive | "intellectual property"

The unreasonable expropriation of intellectual property or the advancement of public health? This was the question posed by Philip Morris Asia Limited v. The Commonwealth of Australia.

In 2011, Australia passed its “plain packaging legislation,” creating restrictions on the fonts, size, colors, and location of tobacco brand marks on product packaging. The legislation also requires enlarged health warnings and creates limitations on the quantity and color of cigarette products per package. Needless to say, tobacco companies across the world were outraged.

Philip Morris Asia (“PM Asia”), a Hong Kong corporation, owns Philip Morris Australia (“PM Australia”) and PML, both incorporated in Australia. PML owns a whole slew of tobacco trademark licenses that were negatively impacted by Australia’s plain packaging legislation. PM Asia brought suit under the 1993 Agreement between the Government of Hong Kong and the Government of Australia for the Promotion and Protection of Investments (“BIT”). Its primary argument was that the legislation’s trademark limitations unreasonably expropriated the value of PM Asia’s investments in Australia. The Commonwealth responded with a thoughtful and solid justification for its legislation as a means to protect the public health of its citizens. The government also convincingly alleged that PM Asia was likely abusing its power under the BIT, in light of its awareness of Australia’s ongoing efforts against tobacco sales. So who has the more convincing argument?

On the procedural front, this case most favorably leans towards Australia. PM Asia had the ability to consider any potential economic impacts to its business prior to its acquisition of PM Australia and PML given its awareness of Australia’s ongoing efforts against tobacco sales. It, therefore, cannot argue that its intellectual property or the value of its Australian investments has been expropriated due to the plain packaging legislation. This prior knowledge will likely be seen as an abuse of power under the BIT.

But in a broader sense, it’s worth questioning whether Australia is overreaching its bounds as a regulator by unreasonably inhibiting consumer choice. Is it reasonable for a government to dictate the consumption of social vices by its citizens?

To begin purely in the realm of philosophy, on one end of this dispute is the claim that such vices (e.g., gambling, alcohol, tobacco) exist in the market simply because there is a demand for it. If citizens want to consume such products and/or services, that is their choice, and governments should not inhibit the free will of its citizens. On the other end of the spectrum is the contention that the government was created for the sole purpose of enhancing the quality of its citizens’ lives by creating order, a system of checks and balances, levying taxes, and providing social welfare services. Vices such as smoking inhibit citizens’ quality of health. Furthermore, private corporations solely concerned with profits will do whatever is necessary, by way of catchy advertising and alluring products, to exploit the weaknesses of human character. It is, therefore, the government’s responsibility to protect the citizenry from such deceit through legislation like the one in question in this case.

There is no easy middle ground in this case. Therefore, I think it would be wise to step away from vices and social conduct, and turn, instead, to the role of intellectual property in international business. The plain packaging legislation can, in many ways, be seen as giving a government broad-reaching authority over international trademarks. This, I believe, is a more easily settled debate. To take away a corporation’s right to use its own distinguishing mark, over which it has a legal right to exclude use by others, strips it of its ability to engage with its consumers. The entire concept of brand loyalty becomes compromised. To limit intellectual property use in an industry often burdened with social stigma can serve as a starting point for further and more restrictive regulation of intellectual property in other industries. There is no such thing as moral utility in the world of intellectual property law. To keep it as such is the necessary tradeoff for promotion of innovation and advancement globally.

On February 4, 2016, the Trans-Pacific Partnership, or “TPP”, was signed by the United States and eleven other countries as one of the most ambitious international trade deals in world history. Through its seven years of grueling negotiations, the criticism of this deal has been, for the lack of a better term, loud. The TPP is a gargantuan, multi-national trade agreement with a lot of complicated international trade jargon; and as such, there have been a lot of choice words tossed around relating to it, not all of which is credible. Thus, what I am going to try to do is break down the pros and cons of the agreement:

Pro:

It will create jobs in the United States and improve the economy.

Economists forecast that the TPP will increase exports by 5 billion dollars, money that will be used to both create business, jobs, and wealth in the United States. It will accomplish this by removing roughly 18,000 tariffs in the Pacific, reducing costs and allowing American businesses to generate higher returns on their sales. While this may seem like a benefit we cannot afford, consider the fact that roughly 80% of tariffs with these 12 countries have been withdrawn prior to the implementation of the TPP. This will prove fairer to American business and make it easier for them to compete. US workers are expected to see a raise in income of about 77 billion dollars.It will help the American automotive industry by reducing the protective tariffs on automobiles in countries like Japan, making it easier to sell American cars to them and further aiding the American automobile industry.

It has strategic value against China.

If you haven’t notice, China is the elephant in the room of this deal. More specifically, they are the elephant outside of the room, as they were purposefully left out of the deal. This economic push has been a part of the Obama administration’s pivot to the Pacific, finding that China’s leverage over the United States has been increasing every day. This deal forms a unified front to compete against China economically in the region, led by the United States. It will create allies, and it will isolate China, preventing them from throwing their weight around during negotiations, and making it more likely that they will be careful not to rock any boats in the foreseeable future. China’s strength comes from its economic girth, and the threat of replacing the Chinese market with others will force it to negotiate from a weaker position in the international arena. These benefits are almost unknown, but it is agreed that it will mostly be positive for the United States.

It helps poor people in poor countries.

State-owned enterprises must comply with trade standards that mandate protecting their workers. Effectively, many countries that did not observe or allow unions to form before, must allow unionization now in order to comply with the TPP. Furthermore, most of these countries will observe benefits to poorest people, allowing them to find suitable, better paying jobs than before the TPP’s implementation. While NAFTA did hurt a considerable amount of people in Mexico, it paled in comparison to the kind of employment requirements the TPP will mandate of its parties. The truth is, measuring NAFTA’s effects on Mexico as an example of what the TPP will do won’t do the ambitious agreement justice. This is truly a whole other animal. For more information on human rights under the TPP, click here for another article written by one of our staffers, Jeremy Goldstein.

It is environmentally friendly.

All countries have agreed to cut down on wildlife trafficking, both marine and on land. It prevents environmental abuses. If a country does not comply with its duties under the TPP, they will be subject to “trade retaliation”, which is fancy word for voiding the parties’ trade responsibilities to the injuring country until they comply with the TPP. So effectively, countries that aren’t doing their fair share to save the Earth among the TPP will be subject to losing their privileges under the agreement. While it might be hard to imagine countries bring claims against others for these environmental violations, it would allow the party to implement trade barriers against the violating country, scoring points with local interest groups. There are reasons to do it, and rest assured it will happen. The frequency is the only real question on everybody’s minds, let alone how often violations will even occur.

Con:

It will kill jobs in the United States, and most of the benefits will be felt by the richest.

While there will be gains for workers across the board in the United States, most of that gain will go to workers making more than 88,000 dollars a year. This is partly because of the stronger international protections being offered to intangible property rights, making it even easier for the owners of that property to reap larger gains. Moreover, just like with NAFTA, there will be US jobs that will ship overseas, it is a major sacrifice of any trade deal. Particularly, manufacturing and textiles will feel the brunt of the move, but no industry will be free either. Even the service industry will send some jobs overseas. Overall, trickle-down economics is the major argument in favor of the TPP, but its application in reality has been brought to question by major economists including Robert Reich and Jeffery Sachs.

Foreign businesses will be able to sue the United States outside American courts.

It might surprise many to learn that this particular provision was implemented by American companies specifically. The primary reason behind investor-state arbitration provisions in trade agreements is to circumvent corruption. Corrupt governments make lawsuits practically impossible to sustain, forcing foreign companies trying to enter those markets to incur immeasurable costs. These provisions allow businesses to circumvent corrupt government practices and try laws under fairer arbitration tribunals. The arbitration award is granted to the business if the country was found to be in violation of the TPP, and the award is enforced by allowing all signatories of the treaty to implement trade restrictions as “trade retaliation” for not paying damages, along with measures under the New York Convention. This may seem like a huge win for big business, but it makes it easier for smaller businesses to enter foreign markets as well by reducing the costs of potential litigation in a corrupt country. While the United States will be suable by foreign businesses, it is worth noting that under NAFTA, the United States has never lost an investor-arbitration claim. If anything, the bigger potential for abuse will be against foreign governments who attempt to implement good policy in the name of public welfare, but they get attacked because of the heightened costs to foreign businesses. While that abuse remains, exceptions to investor-state arbitration were put into the TPP, such as in the tobacco industry. Foreign businesses will be allowed to use investor-state arbitration to challenge American laws that have damaged their businesses.

With that said, the only way to implement such a provision is to accept the standard ourselves. While the United States will be suable by foreign businesses, it is worth noting that under NAFTA, the United States has never lost an investor-arbitration claim. If anything, the bigger potential for abuse will be against foreign governments who attempt to implement good policy in the name of public welfare, but they get attacked because of the heightened costs to foreign businesses.

Intellectual property enforcement will prevent the poorer countries in the TPP from getting the drugs they need.

It should be noted however that this was a major obstacle that the US had to overcome with some of the poorer countries in the TPP. In order to surmount it, the US had to agree to shorter patent protection time periods, reducing the typically 12 year period to five to seven, depending on the patent. But that period could still prove to be too long, and many foreign governments simply cannot afford to pay for the exorbitant prices of some of these pharmaceutical drugs, even at discounted rates. While businesses under the TPP have agreed to continue to allow some creation or marketing of generic medicines using their patents, the intellectual property section of the TPP is one of the heftiest chapters and it remains to be seen how the interactions between all of these intellectual property rules will play out.

The deal will not protect the environment in practice.

Perhaps the most significant drawback to the TPP will be the environmental effects in practice. While each and every country will be required to comply with the environmental provisions of Chapter 20, the countries themselves will have to bring violations of the TPP’s provisions to a dispute resolution body. In fear of retaliatory or cross-claims, countries may be hesitant to actually bring violations of some of the provisions if the cost of adjudicating is simply too high in the short-run relative to the long-term damaging effects of environmental pollution. Essentially, this will also mean that businesses will find more pressure to compete internationally, forcing them to lower their costs. Environmental regulation can be costly to comply with, and many businesses will likely try to skirt around the rules as much as possible to lower costs.

To read the entire text of the TPP in full, click here. For a summary of each chapter, click here. Now that you have all the information, decide which side of the debate you stand on and feel free to comment below.

James Harmoush is a 2L at the Sturm College of Law and the Online Managing Editor of the Denver Journal for International Law and Policy.

A Maori tribesman performing the Haka war dance in New Zealand. http://i.guim.co.uk/

Earlier this year, from March 30 to April 1, the World Intellectual Property Organization (WIPO) put on the Seminar on Intellectual Property and Genetic Resources, Traditional Knowledge and Traditional Cultural Expressions: Regional, National, and Local Experiences (Seminar). Justice Joseph Williams of the High Court of New Zealand expressed, in his opening address, his belief that the seminar was “an opportunity to take stock, evaluate why the subject is important in the world legal order, and why movement is required.” Globally, indigenous cultures have been subject to rampant cultural appropriation of their traditional knowledge (TK). On the international stage, little has been done until recently to provide protection. But the problem is that intellectual property laws traditionally can do little to provide protection. Finding a solution to such a delicate and complicated issue is why seminars like this are important.

The Director General of the WIPO could not have been more correct in his assertion that the seminar was timely. There has been greater recognition in recent years of the effects of cultural appropriation on indigenous peoples. For example, in 2009, the Maori of New Zealand were officially handed back control of the Haka war dance after a decade of legal battles. The dance was being appropriated by the New Zealand All Blacks rugby team. Cultural appropriation like this undermines the traditional significance, including the spiritual value, of cultural property and TK. And for the Maoris (and many other indigenous peoples), such cultural appropriation is not an isolated incident.

Sometimes, like in the case of the Haka dance, indigenous peoples gain back control of cultural heritage. However, even in that instance, the agreement reached between the Maoris and the New Zealand government is seen as largely symbolic. This is because, in many cases, traditional intellectual property legal schemes cannot adequately protect indigenous intellectual property. Intellectual property rights, as they currently exist, are meant to protect individual innovation and only for a limited time period. But indigenous TK is traditionally “communally generated and collectively owned.” Without some sort of modification, or a completely different intellectual property system, indigenous TK will continue to be inadequately protected.

However, coming up with a solution to this problem has been difficult. The WIPO’s own committee on the issue was prevented from meeting this year due to internal disagreements. The Seminar’s aim was to bring together different viewpoints and to “exchange experiences of treatment of traditional knowledge,” And there were many differing solutions brought to the table from around the world. No two were alike. And while regional approaches may have their benefits, without an international intellectual property scheme, how would indigenous peoples protect their TK from being exploited oversees?

Although there are disagreements within the international community about what to do to protect indigenous intellectual property, the goal should be to implement an international legal scheme. Some governments and communities are already on board with an international solution and “have called for an international legal instrument providing sui generis protection.” An international solution would standardize indigenous intellectual property rights and provide some measure of certainty to indigenous peoples that their TK will not be exploited. Current intellectual property legal schemes are inadequate to protect indigenous inellectual property, but protection is sorely needed. The Seminar is an important step to hopefully reach international consensus on how to best approach the situation.

Allison Derschang is a 2L at the University of Denver Sturm College of Law and a staff editor for the Denver Journal of International Law and Policy

Economic espionage involves a state’s attempts to covertly acquire trade secrets held by foreign private enterprises. Many countries have long considered economic espionage important to national security and economic development. Several economic trends have escalated the risk and prevalence of trade secret theft, including the globalization of trade and interconnected supply chains, the growing important of innovation and information technology to competitiveness, and the rise of overseas markets as a critical source of production and economic opportunity. Advancements in technology, increased mobility, rapid globalization, and the anonymous or pseudonymous nature of the Internet create growing challenges in protecting trade secrets. This is a cause for concern in countries worldwide, and is increasingly a point of contention in diplomatic and trade relations between countries. General Keith Alexander has said that the bleeding of industrial information and intellectual property via cyber espionage represents the “greatest transfer of wealth in history.”

Firms feel that China poses one of the highest threats of IP theft

Worldwide, cyber espionage cost an estimated $1 trillion in expenses last year alone. On average, trade secrets are worth two-thirds of a company’s information portfolio. For knowledge-intensive industries, trade secrets are worth even more—up to 70 to 80 percent more, on average. Intellectual property theft costs American companies $250 billion annually, while cyber crime rings in at more than $338 billion total. That means, on a yearly basis the annual theft of intellectual property from U.S. businesses is worth nearly the same amount as the current value of exports to Asia. A European Commission study shows that over the past ten years, approximately twenty percent of responding European companies has experienced at least one attempted or successful theft, and nearly forty percent of responding companies believe that they are more at risk in the past ten years than ever before. In 2007, Japan’s Ministry of Economy, Trade, and Industry conducted a survey of 625 manufacturing firms and found that more than thirty five percent of those responding reported some form of technology loss. South Korea approximates economic espionage damage has more than tripled from 2004 to 2008. Sixty percent of these victims are reported to be small- and medium-sized businesses. Germany’s Federal Office for the Protection of the Constitution appraises the value lost by German companies to be between $28 billion-$71 billion annually due to foreign economic espionage. Economic espionage also costs Germany between 30,000 and 70,000 jobs per year. A Canadian report claimed in 2010 that eighty six percent of large Canadian corporations had been victimized, and that cyber espionage against the private sector had doubled in the past two years. The United Kingdom estimates that attacks on computer systems, including industrial espionage and theft of company trade secrets, cost the private sector $34 billion annually, of which more than forty percent represents theft of intellectual property such as designs, formulas, and company secrets.

There is no international treaty specifically governing economic espionage. The desire to combat economic cyber espionage confronts a lack of international law on espionage and economic espionage. Although a victim country could assert that spying violates the principles of sovereignty and non-intervention, state practice has accepted state-sponsored espionage such that these appeals are not serious claims. International trade law, however, does provide a minimum for protection of trade secrets as an intellectual property right. In particular, trade negotiations and dialogues can offer effective means to elevating the importance of trade secrets protection, raising global standards, and promoting more effective deterrence. Under the World Trade Organization’s (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), WTO members are required to protect intellectual property rights, which include trade secrets. TRIPS Article 39 requires WTO members to protect undisclosed information that is secret, is commercially valuable because it is secret, and has been subject to reasonable steps to be kept secret. The TRIPS Agreement also requires that members make available civil judicial procedures concerning the enforcement of any intellectual property right covered by the Agreement. Also, TRIPS allows “criminal procedures and penalties to be applied in other cases of infringement of intellectual property rights, in particular where they are committed willfully and on a commercial scale.” Aside from failing to enforce its own laws, a government may be pursuing an “indigenous innovation policy,” in which tech handovers are a prerequisite to market entry. For example, the Chinese government has measures and policies that condition market access or investment in China on the transfer of intellectual property from foreign to domestic entities.

Global firms feel that the threat of cyber espionage and trade secret theft are higher coming from China, Pakistan, Russia, and India than from the rest of the world because of corruption and inadequate protections for intellectual property. According to a survey by the U.S. International Trade Commission (ITC), only 0.6 percent of U.S. firms that reported material losses due to trade secret theft between 2007 and 2009 in China pursued any trade secret misappropriation proceedings in China due to imprecise standards, a lack of deterrent penalties, and a host of procedural difficulties. Only an average of thirty percent of trade secret cases brought in Shanghai Higher People’s Court reach conclusions and fewer than half of those result in findings of infringement. The most troubling form of economic espionage is state-sponsored espionage that obtains information from private-sector companies located outside their territories.

Even if there were a clear rule that a victim could show was being violated, the victim nonetheless has to establish the identity of the responsible party. WTO cases have yet to involve accusations against government-sponsored espionage, so the difficulty of doing so is untested, and therefore unpredictable. It is not clear that a WTO member could satisfy this burden by relying on evidence from private-sector entities such as The Mandiant Report and without revealing counter-intelligence means and methods. This is why the state privilege justification of “national security” can sometimes be a bigger burden than a benefit. It is invoked often, and the public has no way of determining the feasibility of the claim. The general public has no idea what their government is doing in the name of national security because it is classified. Therefore, challenging a government’s cyber espionage is particularly difficult because a government will be reluctant to hand over classified information that can be used as evidence against it, and it will claim national security as the basis for withholding such information. Additionally, a government’s participation in spying sends the message that economic espionage is acceptable and lawful in that country, which companies think means that there can be no state responsibility under international law.

The U.S. is currently negotiating two major trade agreements. The Trans-Pacific Partnership Agreement (TPP), which involves 11 other countries in the Asia-Pacific region, and The Trans-Atlantic Trade and Investment Partnership (T-TIP) with the EU both afford opportunities for cooperative advancements in the protection of trade secrets that would help to establish a stronger and more uniform standard worldwide. The U.S. has also been talking with China about a Bilateral Investment Treaty, which allows equitable standards, a better market access for investors, and a forum for dispute resolution between countries. These kinds of talks are definitely a step in the right direction, but it is going to take more than that to establish a norm workable on a widespread level. Time is not something that the economy can afford though, with the ever-increasing expenses caused by escalating cyber snooping and violations of intellectual property rights.

Katelynn Merkin is a 2L at the University of Denver and staff editor on the Denver Journal of International Law and Policy